Loyal customers are more likely to buy products and services again and again from the same store or brand because it has already won their hearts.

2. Cross and Up selling opportunities

This is another benefit of customer loyalty because…

According to the bookMarketing Metrics“Probability of selling to an existing customer is 60 – 70% where probability of selling to a new customer is 5-20%.“

As existing customers trust you more than a new customer, it is easy to cross sell or up sell products or services to them without much effort. It increases sales volume as well as revenue without acquisition of new customers.

3. Reduce marketing costs

Tell us,

What do you trust more – friend’s recommendation or a TV advertisement?

In this digital age, Word of Mouth is still the most effective way to do advertisement.

According to Nielsen’s latestGlobal Trust in Advertising report, 92% customers trust earned media like recommendations from friends and family more than any other forms of advertising.

Not only that,

Second most trusted source of product or brand information is online consumer reviews.

Loyal customers talk about your products, give real feedback, recommend friends and families. Business can use feedback to improve services, launch new products and get better customer insights.

4. Stand tall among competitors

In this super competitive market, it is really difficult to make your brand separate from others. Only loyal customers can create the difference by doing repetitive business, recommend products and services and share feedback.

33% of customers would recommend a brand that offers a quick but ineffective response. On the other hand, 17% of customers would recommend a brand that provides a slow but effective solution. (Source:Nielsen-McKinsey)

A 5% increase in customer loyalty would increase the average profit per customer by 25% – 100%. (Source:TheLoyaltyEffect)

It takes 12 positive experiences to make up one unresolved negative experience. (Source: Understanding Customers by Ruby Newell-Legner)

Customers who rate you 5 on a scale from 1 to 5 are 6 times more likely to buy from you again, compared to ONLY giving you a score of 4.8. (Source: TeleFaction data research)

61% Americans and 54% Europeans switch brands just because of price. (Source:Nelson)

Have you heard – ‘First impression is the last impression’? This is true for business as well. When you sell a product for the first time to a customer, make sure everything is in proper shape like customer greeting, product demo. This creates confidence and trust between you and your new customer. It helps to build customer loyalty and eventually it brings more business from that new customer.

Always stay connected with customers using their preferred communication channel. Let your customers know that you are there with your new products or offers or solutions always.

Improve customer service because 67% customers stop buying products from a shop/brand just for bad customer experience.

Introduce a loyalty program – every time customers buy products from your business, give them loyalty points or incentives. Customers can accumulate these points and redeem for a free product or loyalty card upgrade. This will motivate your customers to spend more in your business and collect points.

3. Cross/Up Selling Opportunities:

‘The probability of selling something to a prospect is only about 5-20%, while the probability of selling something to an existing customer is 60-70%.’ – Marketing Metrics.

Loyal customersalready have a relationship with your business. They trust you more than a new customer.

This gives you a great opportunity to cross sell or up sell products and services. It increases sales volume without much effort on acquiring new customers.

4. Reduce Marketing Cost

This is a huge benefit of customer loyalty.

Why?

Because we trust our friends’ feedback more than a digital fancy advertisement.

6. Forecast Accuracy:

Another importance of customer loyalty that business can’t ignore – Forecast Accuracy.

Forecasting is a crucial part in business planning and running. It enables management to get an overview of future expenses and revenue.

Accurate forecast helps business to decide expenditure, calculate growth rate, discounts and plan for the worst.

Without accurate forecast, it is difficult to attract investors as well.

But how loyal customers can help in forecast accuracy?

Well,

Feedback from loyal customers gives you valuable information about many parameters.

Like…

Customers are interested in your future products or not

Where your business sucks

Product or service pricing

More loyal customers you have, more accurate forecast you can prepare.

7. Improve Brand Image

What is ‘Brand Image’?

Brand image is the customers’ interpretation about products and services of a brand. A positive image helps business to acquire new customers, cross sell and up sell, reduce marketing cost and attract investors.

A brand image is one of the most valuable assets that a company possesses. It tells customers what they can expect when they buy a product or service like quality, post purchase behavior.